26. Under a fixed exchange rate regime, suppose there is a reduction in housing wealth that causes a reduction in consumption. This wealth-induced reduction in consumption will cause

A) a reduction in investment.

B) an increase in net exports.

C) a reduction in imports.

D) all of the above

E) none of the above

Answer: D

I want to ask why the answer is D. As I think that the reduction in consumption will cause the IS curve shift to the left and hence in order to maintain the same interest rate, the LM curve shift upward. And therefore the output decreases, so I think the import will decrease as Y decrease.